Forming alliances to incentivise innovation in your supply chain

So, why supply chain alliances? In today’s fast moving world, how (and how quickly) companies bring new ideas to market has never mattered more. Internal innovation programmes can bring benefits. Often company employees are very experienced in the industry, and when incentivised to do so, produce exceptionally innovative ideas. However, it is arguable that companies who restrict innovation sourcing to their own employees are missing a huge range of ideas from different industries, from suppliers, and from customers.

Introducing supply chain alliances to incentivise innovation

IBM and the Cambridge Service Alliance have studied an alternative to internal innovation programmes: sourcing ideas through the existing supply chain. This can be achieved through re-focusing suppliers, allowing them the space to innovate by measuring them not against outputs, but on outcomes. In order to develop ground breaking, original ideas, it is crucial to provide an incentive for companies to deliver the best solution possible for clients, customers, and suppliers, not merely the most profitable.

The freedoms regarding the range of possible solutions available to contractors when employing an approach that focuses on supply chain alliances will encourage innovation in the supply chain; the contractors are incentivized to deliver more efficient solutions that provide exceptional customer outcomes. A collaborative environment should lead to genuine industry leading, cross-company innovation, combining talents from multiple partners.

supply chain alliances

The three fundamental themes for success presented in this paper – a robust commercial arrangement, unhindered collaboration between partners, and effective operational design – when carefully designed and implemented, will help companies to source and implement cross-industry leading innovation, driving a better customer experience and increased financial benefit for both clients and contractors.

If you are considering using the alliance approach with your suppliers, you should first and foremost be talking to them about how to drive innovation through their supply chains. Contact Keith Wishart to find out more and check out the paper here.

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